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Tax cuts for alcohol producers in new US tax plan

Tax cuts for alcohol producers and importers included in Republican tax plan
by Sophia Moss
Small US brewers are among those that will benefit from the Republican tax plan, which includes tax relief for alcohol producers and importers, if the vote is passed this week.
The US beer industry has been fighting for tax cuts for over two years and now they may be seeing some progress as The Craft Beverage Modernisation and Tax Reform Act (CBMTRA) has been included in the final version of the Tax Cuts and Jobs Act.

The bill will be voted on this week (potentially today) before US President Donald Trump is given final approval. The proposal is effective after 21 December 2017 and it expires for taxable years beginning after 31 December 2019.

If it goes ahead, American brewers would receive two years of tax cuts.

Beer is currently taxed at $18 per barrel and smaller brewers are taxed at the reduced rate of $7 for the first 60,000 barrels produced. The proposal would reduce federal excise tax for smaller brewers from $7 to $3.50 per barrel on the first 60,000 barrels and anything further will be taxed at $16 per barrel.

Prices for larger brewers will also be cut from $18 to $16 a barrel on the first six million barrels brewed or imported. Beer brewed or imported above the six million limits would still be taxed at $18 per barrel.

The tax cuts will also translate into savings for the wine and spirit industries in the US. The first 100,000 gallons of distilled spirits would be taxed at $2.70 per gallon and $13.34 for above 100,000.

Small domestic wine producers currently receive tax credits if they do not exceed 250,000 gallons, but the new proposal will lift this limitation and give credit to all wine producers, not just small companies.

Sparkling wines and mead will also be taxed at the lowest rate that ‘still wines’ are currently taxed, i.e. $1.07 per gallon of wine. The tax cuts could result in cheaper alcohol for consumers and less rigorous regulations on the drinks industry.